Power Lunch - CNBC Special: The Fed Decision 5/3/23

Episode Date: May 3, 2023

“Power Lunch” is on the road in Washington, as we count down to the Federal Reserve’s latest interest rate decision. Our all-star panel breaks down everything at stake, while Sen. Elizabeth Warren joins Kelly and Tyler to discuss the economy, the banking crisis & more. We’ll cover all the angles for you right up to Fed Chair Jerome Powell’s press conference. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome now to Power Lunch as our special Fed coverage continues. I'm Tyler Matheson, along with Kelly Evans. We're a few minutes away now, about five from the release of the Fed's statement. Here's where markets are with just a couple of minutes to go. Dow's up 31 points. NASDAX's up 56. It's leading the way with a half percent gain today. S&Ps up 11 to 41.30.

Mark, it's not really leaning into the Fed here. No way or another, are they? Let's bring in our All-Star Fed panel. We have Christian Bitterly, City Global Wealth Head of the North American Investments. Welcome, Kristen, and David Kelly, J.P. Morgan Asset Management Chief Global Strategist, and Jim Caron. He's Morgan Stanley's Investment Management, co-CIO of global balanced funds. Jim, I'm going to begin with you. You put a stake in the ground and say the Fed will raise rates, but that'll be it. Why do you believe that? Well, look, I mean, I think we all know what the issues are right now in the economy. Obviously, some of the small banks, and we are starting to see some slowing. So I think it's time for a pause. The question, though, for me, is that the markets right now are priced as if the Fed is making a mistake, that there's going to be cuts immediately after that.

But the way that I see it, the Fed is also going to have a hawkish pause. It doesn't mean no mea culpa. So the key is to listen to the press conference, see how the Fed actually explains this, because the markets are not necessarily agreeing with a hawkish pause, and I think that's what we end up getting. David Kelly, your reaction to that, and I still remember what you said when we began this cycle, and the history tells you that the Fed usually goes too fast, too far for too long. Is that what's happening here? And what do you think will happen today?

Yes, and to Jim's point, I think they're going to stay too tight for too long before they have to cut rates aggressively in 2024. I agree that they're going to go 25 basis points today. I think they will change their forward guidance. The forward guidance in the statement last month or in March suggested that they were likely to see a further increase. I think they'll say that they'll assess today to see whether they should make any further adjustments to interest rates. But I think they'll make it clear that they could be done.

The problem is I think they'll also try to make clear, particularly the press conference, that they've no intention of cutting rates between now and the end of the year. That's their plan. I think they'll change their plan when they see negative payroll read later on this year, which I think is quite possible. But I think they'll stick to it for too long, and therefore they'll have to cut. more aggressively next year. Kristen, how about you?

Where do you come down on this debate? We see a 25 basis point hike today, and we're very hopeful that that's the last. We believe that they should pause. I think that Chair Powell's going to keep his options open, and we're going to hear a lot of the same as to what we heard before about being data dependent. Our biggest challenge in this and why we've been very defensively positioned within our portfolios is the fact that when you look at the leading indicators, the leading indicators have declined by eight percentage points,

which in any other cycle would have been a signal to the Fed to pause. And so this is something that leading versus lagging indicators, what are their benchmarks, what are their North Stars? And so I do think one thing that he will reference, though, is tightening credit conditions. We expect some commentary about regional banks and what the impact of those tighter credit conditions

is going to have going forward. Jim, back to you. David mentioned the labor market. We got news earlier this week that job openings declined sharply. Is that, to use the cliche, a canary in the coal mine, that some of the effects of higher rates are really beginning to dig in to the economy? Undoubtedly, I mean, look, we're supposed to have a slowdown when the Fed hikes rates, and that's what we're seeing.

The thing that's been keeping the market somewhat afloat is that the labor market's been strong, and consumption's been good. So therefore, profit margins and company earnings have been holding up okay. But it's really only a matter of time before that really slowly starts to deteriorate. And the question is how much and how deep and for how long. And then that's going to really gauge what type of a slowdown or even possibly recession that we may end up having. So I think that's really the key point here. And I think Powell's got to really balance the tight labor market conditions, the sticky inflation,

but also the need to say that there's enough hikes in the pipeline already at the moment that it'll probably do the job for it doesn't need to do any more than this. And we should remind everybody that we won't get the projections or the dots as they're calling. today, so a little bit less information than we've had in some other meetings. And that said, it's always, you know, the statement, the language in the statement, and then the press conference with Chair Powell. David, I guess there's some questions about whether they'll, you know, use the word yet in their statement to kind of indicate some flexibility about rate hikes or not here. And we'll come back to you in just a moment. Steve Leesman has the Fed decision here in just a couple of seconds time. Will it be that quarter point or something different? Steve?

Reserve raising by one-quarter point, bringing the funds rate up to a range of 5 to 5.5.5% the Federal Reserve offering, I guess I would call it strange, somewhat hawkish forward guidance that's less hawkish than the last time around. The Fed's saying it is determining whether additional policy firming may be appropriate. That's a change from the prior language that it removed, where it said it anticipates that some additional policy firming may be appropriate. So maybe one way to think about this is it's gone from being pretty sure it's going to hike to maybe it will hike, but it's really looking for a reason to do so. Again, I'm going to repeat that. The Fed now saying it is determining whether additional policy firming may be

appropriate, taking out language saying that it anticipates that firming will be appropriate. The U.S. banking system, the statement says, is sound and resilient, but tighter credit conditions are likely to weigh on households. The extent and effects of that remain uncertain. Inflation remains elevated. The committee, it says, remains highly attentive to inflation. inflation risks. On the economy, just a couple lines. Economic activity expanded at a modest pace. Job gains have been robust, unemployment low, and inflation elevated. So back to you guys, to chew over what that statement means. Is it a pause? Is it a, I don't know what it is, guys. Back to you. Was it a unanimous vote, Steve?

It was absolutely a unanimous vote. Yes, good question. All right. Yeah, because we actually had some discussion from former Fed officials saying if they continued to hike, they might pause. Eric Rosengren was one of those up. people. On your screen is a board of the regional banks, which are still in the green, obviously, First Republic accepted from that, although the gains are modest. PNC up about a tenth of a percent, U.S. Bank up 1 percent, M&T, a little less than 3 percent. Let me bring in Bob Bassani and Rick Santelli for some quick blush market thoughts here. Bob, what do you see? Well, look, it's the phrase determining whether additional policy firmening may be appropriate

is different than saying some additional policy may be appropriate. That's a lot more indeterminate. And the S&P moved up slightly on that. And so look, the question is, the market was positioned for a hawkish hike, meaning the Fed's going to raise rates indicate inflation's coming down, but it's still too high, and we'll hike again, if needed. What would make the market go up as any kind of a doveish hike. The doveish hike would be, okay, we've had some progress on inflation being made. The bank crisis is slowing lending, and implying somehow they're uncertain about how much more they want to hike. And to that extent, I think this, They're satisfied a little bit of that.

What makes this really hard to figure out, it's just this whole impact of the banking crisis on tighter financial conditions. That seems to be the real issue here. So this bank thing is more from deposit flight into something bigger, about more regulation coming, about tighter credit conditions, particularly in commercial real estate lending. So I think that's really what the market wants to hear. They want to hear that the banking crisis is causing the Federal Reserve to be additionally more cautious than they normally would be. They want to know that the rest of the year, nothing is going

to happen. And that's, I think, why the market's holding up. The market doesn't want to believe in the hard landing. They want to believe that growth is holding up. Their earnings are not getting slashed. That's what we're seeing. But it's all dependent on how the Fed is approaching the second half of the year. So we want to hear more about that banking crisis and how they're dealing with it in the presser. Rick Santelli, did the bond market get what it expected? Did it hear what it wanted? Oh, I think it did. I think as a matter of fact, if I look to my sources as reflecting the general sentiment within the buy and sell side on the street, pretty much everyone was expecting a quarter point. And I think for a bit of a silly reason, actually, because if the Fed didn't deliver what it perceived the market priced in, many would question what the Fed knew that the rest of the street didn't know.

I'm not sure I buy into that. But so the short answer is yes, Tyler. And as you look, two-year-no eels have dropped three or four basis points. Tenure are fairly steady. Fed Fund Futures as referenced by January of next year, has moved up just a smidge. Here's the way I would frame it to try to keep it quite simple. For the most part, we're at the end of the line. If the Fed needs to reverse course and ease at some point in 2023, I think they lose a bit of credibility again.

You know, the old mantra, Tyler, is don't fight the Fed. Well, let me think. Let's harken back. Fed was buying treasuries in QE. There were buying mortgages. They're keeping interest rates artificially low, and they're paying interest on excess reserves. Then they embarked on one of the most aggressive tightening sequences since the 80s. It should be no shock to what happened to the banks. The fact that it was really continues to make me scratch my head. So now we went from don't fight the Fed to what? Don't fight the Fed, but they switched from QE to QT.

How can traders keep up? I think the notion of what the Federal Reserve is locked into as more a function that they really don't like to go back and chew their tobacco twice and you really can't fine tune the economy like a carburetor Tyler. I know it's old school, but you know if you turn the gas down so it doesn't quite run as rich and it starts to choke, you crank it back a little bit. You can't do that with the economy. If you over tighten, it isn't a matter of just going back a half a turn on the screw. What it means is you have to go back and try to save face because you went too far. Kristen bitterly jump in here. We've seen the Dow fluctuating somewhat between gains and losses. Everything else looks pretty steady, but obviously the real fireworks often come at 230. Yeah, so we're going to be watching that press conference very, very closely. I mean, this is the thing. Those comments about that something is going to break, there are things that are clearly

breaking. And so I think this commentary around the fact that it does open up the potential for a pause, That is what we were hoping for. That is what we're expecting. Because even when you look, I know some people are pointing to risk assets and looking at the equity markets. But Q4 earnings, we have seven out of 11 sectors already in a profit recession. We already know about the breadth of this equity market rally where you have seven companies that are comprising 80% of the gains. There is a lot going under the surface.

And so I think we'll look for the comments from Chair Powell. Jim, let me ask you, is this the pause you were. looking for when they change the language to determining whether further interest rate tightenings will be appropriate versus anticipates further tightening? Yeah, that's exactly right. So determining just means that they're on a wait and see course. And what they're saying is that they are worried that what if inflation becomes unanchored, what if it doesn't go down as much as they want, then they're going to have to come back into the markets. And that's going to be much, much worse. So they want to leave the door open a little bit to the potential that they may continue to hike just to keep inflation pressures under control.

And I think that's a really, really key point. So I view this as more of a hawkish pause. And I would say that if the data doesn't materially start to weaken as many expect, then we may have to re-anticipate the Fed to come back in. And they want to leave that door open. David Kelly? Well, clearly the key thing is moving from when to weather. So this is a pause. and I don't think they'll raise rates anymore.

But the real question for me now is, can the economy actually function at a rate of five to five and a quarter on the federal funds rate because it's been so conditioned to almost zero interest rates? And I think the real key here is, you know, let's keep an eye on the banking industry.

We hope the worst is behind us. But if you continue to see deposits flow out, you could still have a problem here. And I think there may be problems ahead quite apart from, you know, the debt ceiling issues and other issues and maybe problems ahead. So I still think the federal.

Federal Reserve is going to have to cut before the end of the year because I think they've gone too far. I think it's just going to take a few months for us to fully realize that and for them to realize that. And David, we all sort of look at this and say, well, a quarter point can't make that much difference to the economy. But if that quarter point now brings, for instance, money market funds yields to over 5 percent, that's a big headline number, right? Or other kinds of high yielding instruments that will pull deposits out of the system. This quarter point could matter a lot. Well, yes, because we're assuming that deposits are sticky, but when was the last time we tested that? We tested that more than 15 years ago when we actually had normal interest rates the last time.

So we don't know how sticky deposits, in fact, are. And if at 5% money keeps on flowing into money market funds and out of the banking system, there can be some problems there. So I think for this economy, we don't know if over 5% is in fact too far. Steve, I know you want to jump in. I'm just seeing the June Fed futures probability at 96% for a pause. That's where it's at right now. Oh, sorry, 88% for June. I'm sorry, with a slight hike built in at either side, that 12 points is kind of divided.

I think this is not as dovish as maybe some had hoped. If you think about it, they're saying they're determining whether additional firming may be appropriate. They're not determining whether additional easing may be appropriate. They're determining whether additional firming may be appropriate. I'd say it's sort of a halfway house for a pause more than it is anything else. It's not like a, they could turn around. And if they were to hike in June because they still have high inflation, they do not, at the moment it would appear, see the banking issues as being more important than the inflation issue.

So we're watching this. The gap between the Fed and the market remains where it was. 75 basis points of disagreement where the market continues to believe the Fed's going to turn around and start cutting towards the end of the year. So I think we pretty much are where we are with maybe not as much dovesiness in this expected pause as maybe some had hoped for. That said, Steve, it looks like the market's starting to price in rate cuts in September after this decision.

I don't know if we can show if it's September or October. Yeah, so that feels like them reacting to, you know, the language opening today by saying, boom, we're going to start to get our cut in a couple of months' time. So the first quarter point, Kelly, is fully priced in September, October. And then another quarter. So you're at a 450, 440 is what it is for the end of the year. So what is that? That's almost 75 basis points of cuts built in. And you get your first one beginning by the end of the summer. Kristen, final thought here, hard landing or something other than that for the economy by the end of the year?

Look, we're in the camp that we will see a recession, that it will be a mild one. And I think the key factor right now is this idea that we went from a rate, shock and now we're really evaluating what is a credit shock. And so this idea that you're going to see the continued outflows of deposits into money market funds, we eclips that $5.2 trillion. We've seen already since the beginning of the rate hikes, close to a trillion dollars out of deposits, and then just thinking of credit availability and what that means more broadly for the system, I think that can create some volatility from here to come. Jim, that makes me wonder where you think the 10-year yield, where its next stop might be?

where you ultimately think it might settle out this year. Kelly, that's a great question. As Steve Leaseman was saying, look, you mean, bond markets take warrant because if the Fed sees that inflation isn't coming down, they could start to rehike again. And I don't think anybody's pricing that. The bond markets are not pricing that the bond markets are not pricing that the Fed's making mistake that they're going to have to cut and they're going to have to cut aggressively.

If that doesn't happen, then some of these longer duration, high-quality, safe trades, quote unquote safe trades may actually add risk to portfolios. So I don't think we're out of the woods here yet. I don't think we're out of the woods with inflation. I don't think we're out of the woods with volatility and the uncertainty around the Fed. This is a long-term game and we're still playing it. Yeah, we see the 10-year yield there just below about 3.4%. And we've obviously had guests Shri Kumar comes to mind who said 275 could be the next stop. So everybody seems to be on that side of the boat, David. Even those who think that maybe the Fed will try to keep hiking seem to be saying it's just going to cause more damage in the longer run. Well, yes. And I do think we are

actually out of the woods on inflation. Everything I'm looking at in inflation tells me, look, it just comes down steadily. It takes a few years to do this right. But inflation is coming down. I believe by June, the CPI headline inflation rate will be below 4%. Well below 4%. And that's not too far away from where the Fed's headed. I think during the course of 20, 24, it'll come down to two, and probably go below that. So I think the Fed, by the middle of the year, the Fed's going to see the economy basically with, you know, inflation continue to fall, but, you know, growing concerns here about business spending in general and about a credit crunch, and I think that's going to make them eventually cut. The problem is because they, because, you know,

what Powell's going to say this afternoon is, you know, don't believe the markets about this. We're not going to cut before the end of the year. And the problem is, you know, I think that that's going to force them or they're going to force themselves into state. being too tight for too long and then cutting at the end of the year next year. But it's going to be a little too late to stop us from slipping into recession by then. Yeah, we have the markets largely in a similar kind of pattern we saw prior to the decision. Dowell was negative at last check. Rick, I just wanted to ask you about the dollar before we go out here.

It's softening, its weakness, if you want to call it that, has been a tailwind so far this year. Does today change that? You know, I was in the camp that the dollar is going to weaken as we get to the end of the cycle. and I believe we are at the end of the cycle. But now I'm going to revise that call. I think the rest of the globe still has more intense economic issues than the U.S. I think the dollar is going to fool many traders and remain more buoyant. I do think it'll test 100.

And in the final analysis, I think that the biggest issue that I would look at is we're going to have a very stagflation-ish economy where growth is going to be less and we're not going to see 2%. we'll maybe see two and three quarters to three percent with regard to pricing and inflation. But maybe the biggest issue I disagree with is at some point the curve is going to steepen. I think 10 year no yield stop around 10 percent. But after that, I'd be quite careful that they start to move higher as the curve disinverts and restepens. All right, as we often see, kind of as we get into the later stages into that slowdown. We'll leave it there, everybody.

Thank you so much for joining us. We really appreciate your time today. As we await comments from Fed Chair J Powell, we'll get that at 2.30 Eastern time. We'll first get more reaction to the decision from Senator Elizabeth Warren. She joins us here on set right after this. Welcome back to Power Lunch, live in Washington for the Fed decision on interest rates, which we just got. Joining us now, Senator Elizabeth Warren of Massachusetts, member of the Senate Banking Committee. Senator Warren, welcome. Good to have you with us.

Thank you. It's good to be with you. You have been critical of Mr. Powell, and you, I think, are going to be critical of this move today. I just think it's the wrong direction. Look, all the signs are going in the right way. That is, inflation is abating, the economy's softening. We've seen GDP begin to pull back a little. And we've acknowledged all along that the problems we have that have been driving prices higher are not all problems that you can fix by raising interest rates.

You know, we have a war in Ukraine that messes up supply chain and energy costs and food costs. We've had a lot of price gouging that giant corporations don't want to talk about, but families are sure feeling it. And you can raise interest rates, but it's not going to affect those. You've got other tools you have to work. We've had supply chain kinks that are beginning to unkink. Again, not affected by interest rates. And what concerns me is that Chair Powell hasn't just raised interest rates.

He has raised them on a curve unlike anything we've seen. Deepest in 40 years. in 40 years. In 14 months, he's gone up five points here. And that's when things start to break. Plus, look where he's aiming. He's aiming to put people out of work. So I take your point that inflation has come down, but it is still elevated by recent historical standards. Absolutely. And that exacts a very severe price, particularly on low-income individuals or people on fixed income. They hurt because of that. So if you... If you're committed to the idea of bringing inflation down, how can the Fed help do that if not merely by raising interest rates?

What are the other tools they have? And let's put Congress off to the side because there's a fiscal side here too. Right. But with respect, I think it's the wrong frame. When you start it by saying what else can the Fed do, the Fed is a one-trick pony. The Fed raises interest rates and lowers interest rates, I mean, basically. So they look at the world through that lens. But look at the effect of price gouging, for example.

And the data, depending on who you want to read and what you want to look at, but at least 40% of the increase in prices attributed to price gouging. That is, look at industries where there's greater concentration. And what you see is prices went up more sharply. And you see that margins went up, that profit margins were going up. The Fed is the wrong actor to go after that. So they've done. In your view, they've done more than even they should have done.

And to squeeze out what inflation remains, you would look at, what, legislation to address price gouging? Legislation could be part of it, but the FTC is part of it, the Attorney General. We have laws in place that give us some tools on price gouging. I'd like to see us do more. That would be the legislation part. States also have any price gouging laws, and they can bring those to bear. Partly, you can use jawbone on it, too.

The chairman of the Fed, the president of the United States, can talk about these industries with specificity about who's in there pushing prices up more than is justified by an increase in costs. You know, it's funny, I hear from a lot of people who have been saying knowing we're going to speak with you today. They go, normally, I'm not a fan of Senator Warren. They might work on Wall Street, for instance. They might be on the other side. But they say, but I agree with her on this issue. Now, they might not agree with all of the reasons that you cited, but they say the Fed is going to create a lot of job losses if they continue to hike here.

So there's odd bedfellows where, as we consider sort of like the progressive view on this, and to some extent, the more, the people who are deeply in the markets are both calling for a pause here because they're concerned there's going to be a lot more pain. to come economically speaking. And you know what really troubles me about that? It's that the pain to come won't be a surprise. It won't even be incidental. Go back and read the Fed report.

For example, the Fed report from December, which specifically said their target is to increase unemployment by one full point in less than 12 months. Now, what that means is go explain to 2 million people who are going to lose their jobs, people who who are making their mortgage payments and their rent payments and their grocery payments right now. Sorry for the good of the overall economy,

you have to lose your jobs, but also look at the rest of it. How many times out of the last 12 times that unemployment has gone up one full point in a 12 month period, have we avoided recession? How many times? Zero. And here's the other one.

How many times when unemployment has gone out by one full point, have we been able to stop it? at one point? Never. Once. Really? Once. So it's been once. I don't remember which. Yeah. But the point is it almost never happens. So the odds here, this is where the Fed is aiming. That's the part that gets me so worried about this. First, they do not have all the tools to fix the problem. It's the wrong. It's a mismatch. They have one sort of blunt instrument of that and quantitative type. That's their measure of success. And their measure of success is two million people lose their jobs. And statistically

speaking, the odds they shoot us straight into recession are really high. Let's turn to the other aspect of this, which you're working on today, trying to claw back some comp from the banks. I don't know if you heard Senator Kennedy, who was on this, sitting in your chair about 20 minutes ago, and he very clearly said he thought this was an issue of bank mismanagement. So, A, how do you kind of come at that? And B, it's quite obvious mismanagement or not that we have a concern about the health of the banks more broadly. You never want the public in that position. How do you stop that concern from metastasizing? Do you support raising deposit insurance limits on payroll accounts or brothers? So let's start with clawbacks. Okay, because the

advantage here, here's a tool where we can better align incentives. And whenever you can get incentives better aligned, it means you're more likely to get the outcomes you want, right, rather than solely by regulation. So the idea behind clawbacks is to break the cycle where we are now. The folks at SVB Bank and signature and First Republic, they all came to Congress in 2016 and they said, loosen the regulations. Listen the regulations. Donald Trump ran for president. Said if I get elected, I'll loosen the regulations on these multi-billion dollar banks.

He got elected. They put in regulators who loosened the regulations. In 2018, Congress came along at Donald Trump's request and with help from Democrats and Republicans loosened the regulations even more. And you know what happened? Exactly what you would predict. The banks then loaded up on risk in order to boost their short-term profits and paid themselves huge salaries, bonuses, stock options. And then when the banks blew up, they kept the salaries, the bonuses, and the stock options. So look at what that means in terms of incentives. If you can get yourself to a position where you're one of the top executives at one of these multi-billion dollar banks.

How far back would your clawbacks go? Five years. So five years worth of their total comp, they will have to give back? I'll tell you why. It's because what the data show right now, GAO report on this, said SVB started its pumping its profits by taking on risk and pushing that money out the door to the executives five years. years before the failure. So it's a five-year look back. You don't have to take it all back if that didn't happen, but at least you've got a five-year window to be able to say, if you guys started behaving like this, you're going to have to give back that amount that you took. That's the

message we need to send to every single executive of every single one of these giant banks. So I take your point that bank regulations were loosened and regulators had a bit of a hands-off approach, but Mr. Barr of the Fed took a fair amount of responsibility onto the Fed for failing to do what they needed to do to prevent these banks from failing. So it sounds like there was, there probably was adequate regulation or they could have known what was going on in these banks and done something about it, and yet they didn't. True. Right? True. But what inference do draw from that? Why was the Fed, let me ask you two questions. Why was the Fed able to loosen regulations like that? Well, part of that is from the 2018 change in law that gave the Fed the

opportunity, but the second part was the culture. It invited the Fed to loosen those regulations. Randy Quarles, you remember him, the Vice Chair of the Fed. In charge of regulation. Let's go back and play the tapes from him talking about his mission was to change the culture at the Fed so that they were lighter, more hands off, not looking over your shoulder. And now we reap the consequences of both the decision in Congress and the decision by Jerome Powell to back up the Fed in doing this. On that point, it was a problem of regulation and of the regulators. Yes. It was one and two. One and two. And the fix is exactly one and two. So the fix is,

is Congress should do its part and tighten back down so the Fed can't do this. But even before Congress acts, I mean this very afternoon. Instead of holding a press conference, Jerome Powell should be tightening down those regulations at the Fed, where they have the discretion to do that. And then part three is put some more tools in the arsenal like clawbacks in order to align the incentives of the banking regulators better with keeping those keeping those banks stable. Let's talk a little bit about a topic that we touched on the last time you and I were together,

and that is stockholdings and investments of members of Congress. Yes. What progress, if any, has been made on that front? And I note that you personally do not have individual stockholdings. You have funds and things like that. That's right. That's it for me. So what's happened and what's left to do?

A lot. So you want to talk about something that's hard, you know, trying to. to get members of Congress who will all say in general that they think there's, well, I shouldn't even say they all say it. Some will say there's a problem with stock trading. But look, I've been in negotiations with this. I've got good bipartisan partnerships going on here. We've met, we've met, we've got the language down. We're meeting again next week. I don't want to show too much here. but we're moving this thing along because we've got to. The American people cannot read time after time

that members of Congress were trading in bank stocks while the Fed is trying to figure out whether to move in on a bank. We just have to stop this. This is part of the cost of being in public service. You know, if you want to be a stock trader, Bless your heart. Knock yourself out. Terrific. There are about 8 billion different jobs you can have that you can trade stocks on the side or you can make it your principal occupation, but you want to be...

We have 19 seconds. An elected official, no-stock trading. I just want to know about raising deposit insurance or not. Would you raise deposit insurance payroll? Look, right now we have unlimited deposit insurance. Oh, come on. Everybody knows that only the difference is the big banks and the big depositors that are taking advantage of it aren't paying a penny for it We need to raise it and make the people who take advantage of it pay for it This is all hurting small banks more than anything I absolutely because they're now going to have to pay into these and because of the the lack of clarity

The big banks keep getting bigger which sounds like was so this the little banks are subsidizing the big banks They want the insurance rates they say that's how you level the playing field we can compete with the big guys if you'll raise that cap for us would you do that? Absolutely Thank you.